Commission-based pay and salaries are two common pay structures used by employers. Commissions are common in sales jobs where salespeople are paid based on the amount of volume they generate. Salaries and commissions have pros and cons for salespeople.

Commission Pros

Commission salespeople are usually motivated to produce more sales because their paycheck is tied so closely to performance. Each sale means more money, and there is usually no ceiling on potential income. For ambitious and money-driven sellers, commission pay drives them to make more sales calls and work to close more sales. For the company, paying salespeople on commission means it only pay for results.

Commission Cons

The biggest drawback of commission pay for salespeople is that it offers no guarantees or stability. Salespeople nervous about the risks might get burned out quickly from the pressure. Many sales reps who work on commission can also make their own schedules. Although this gives you more flexibility, it also means you need to be disciplined enough to work enough days to earn a decent living. Salespeople paid on commission also have to pay for some of their own expenses in some cases. In this sense, they invest in their own selling business.

Salary Pros

A straight salary is divided and paid in equal installments over time and provides more stability and comfort. This can ease the pressure on salespeople. Sales employee expenses are usually covered by the company in a salary structure. Companies also tend to put more time and effort into training when salespeople are salaried. Additionally, when salespeople are not motivated strictly by the money they make off of commissions, they might spend more time emphasizing customer service and other facets of their jobs beyond sales performance.

Salary Cons

A straight salary has little ability to motivate. It provides stability, but when salespeople know they get paid regardless of performance, they might not be motivated to go above and beyond the minimum performance level. A salary can also limit a salesperson's pay. If you need to make more money to cover additional expenses, such as a new home or new child, you don't have many options beyond asking for a raise. Another downside of salaries is that they don't encourage a competitive spirit in the sales force, which can limit growth in the organization.